But when we look at the share of global energy coming from renewable sources, it is clear there is still a long way to go. According to the Energy Institute Statistical Review of World Energy (previously the bp Statistical review), renewables – excluding hydro – had a 7.5% share of primary energy consumption in 2022, an increase of nearly 1% over the previous year. But fossil fuel consumption had a steady 82% share.
Even in power generation, where renewables have made greater inroads, the record share of 12% achieved by wind and solar still fell far below the 35% of coal and the 23% of natural gas. The world needs not only to transition to clean energy but to do so as global energy consumption continues to rise, driven by the increasing planetary population and the continuing growth of energy-hungry economies.
Contrasting pathways
Different nations have quite different pathways to clean energy. The challenges facing a Gulf state where fossil fuels form an important part of the economy are different from those in a CEE nation with heavy legacy coal consumption, which are different again from those in a nation like Kenya which, although less developed, already derives well over 80% of its electricity from low carbon sources (thanks mainly, in Kenya’s own case, to a plentiful supply of geothermal energy). Every nation has to make a unique set of choices based on its existing power mix and economic circumstances.
It bears restating here that many governments have not yet committed to the elimination of fossil fuels. Energy security concerns have also led a number of nations to review their schedule for reducing fossil fuel use, and in certain cases to secure additional supply.
A reminder of vulnerability
The invasion of Ukraine in February 2022 significantly impacted global energy markets, leading to a dramatic spike in fossil fuel prices, as well as concerns about the supply of natural gas from Russia. But the likely long-term effect of the war on Europe’s energy transition is still unclear. On the one hand, fossil fuel use has increased in the short term. Indeed, the World Economic Forum has pointed out that in order to reduce reliance on natural gas in the face of high prices, the use of coal may need to increase. Ironically, too, the war has had a negative impact on the viability of some renewable projects, particularly those with low locked-in electricity prices, as it has pushed up construction and maintenance prices throughout the supply chain.
On the other hand, the transition to a net zero economy may be accelerated. The war has highlighted the risks of fossil fuel reliance and the need to transition to a greater use of renewables. In March 2022 the EU set out its plans to become completely independent from Russian fossil fuels by 2030, emphasising the need to shift towards renewable energy through steps such as increasing the use of solar panels and heat pumps and reducing rollout times for renewable projects. Shortly afterwards, the UK released its own energy security strategy.
New technologies
To make the energy transition a reality, the development and adoption of new technologies needs to accelerate. We may see a greater roll-out of carbon capture and storage schemes if these can be made commercially viable at scale. We will certainly need battery capacity to store and distribute excess renewable electricity. Existing assets for transmission and distribution also require investment and upgrading. Electricity grids must be able to handle higher weather-dependent volatility in generation. Backup systems, likely using natural gas, will need to be operational and resourced until the new technologies supporting expanded renewable generation are bedded in.
A transition from nothing
The analysis above is largely based on the situation of developed nations that need to upgrade their assets. It is worth recalling that some other nations do not have such secure foundations to build on – and that about 675 million people, mostly in sub- Saharan Africa, are without access to electricity. It will be possible to serve some of them by extending national grids, but in rural areas, where the majority live, when access comes it will probably be delivered via mini-grids (stand-alone grids with local power sources, such as solar or small hydro schemes, and typically with some storage capacity) or microgrids (essentially small mini-grids, often with just a few users).
Other nations may not have to connect significant numbers of off-grid citizens but will struggle to raise climate finance in anything like the amounts available to more developed economies. Research last year from BloombergNEF, commissioned by the Glasgow Financial Alliance for Net Zero, shows that emerging markets and developing economies (not counting China) need an additional annual USD 1 trillion of investment by the end of the decade in order to transition to net zero.
These nations have had some recent success in mobilising domestic investment for renewable energy, but overall levels of investment including international investment have been essentially stagnant – unlike energy transition investment in developed nations, which grew 24% year-on-year in 2021. In the words of the Glasgow Alliance: “the climate finance mobilisation gap is widening.”
